Many new businesses find the process of securing funding to be complicated and overwhelming. However, there are many ways to make finding startup money feel less daunting. Some more obvious choices, such as self-funding and finding grants, are viable and effective options. However, other funding opportunities often go overlooked.
When you’re ready to explore funding options, be open to different opportunities and less obvious choices. Starting a new business is difficult, but many individuals and groups want to help small businesses succeed. Be sure to seek out a variety of funding opportunities when it’s time to get your business off the ground. When your business is off the ground it may be worth seeking legal advice from a firm such as the law offices of Steinberg Goodman & Kalish in order for them to ascertain your legal position in regards to any outside investment.
Most business owners will need to self-fund to some extent to start their business. Self-funding will be most crucial during the experimental stage of launching your business. If you’re willing to invest in your own business early on, many investors see this move as a sign of your confidence in and commitment to your idea.
2. Partnering Up
For many new businesses, partnerships can be mutually beneficial and will cut your personal costs. New companies can partner with more established ones to gain more resources and a potential client base. Some startups seek to partner with other new businesses to share larger office spaces in more ideal areas or split equipment costs.
In either partnership type, it’s essential to consider if the partnership is equally beneficial and that both parties are equally invested. Partnering with someone who only needs short-term help or who may pull out of the deal at the last minute can cause your business more harm than good.
3. Friends and Family
People who know you and understand your work ethic are more likely to support your business financially. As such, several startups find asking friends and family for funding to be a successful way to get their business off the ground.
However, mixing personal and business affairs can always come with the risk of damaging your relationships. To minimize that risk, clearly explain if their money is considered a donation, an investment similar to buying stock, or a loan you will pay back with or without interest.
Crowdfunding is a growing trend in the startup world. With many online crowdfunding sites available, it’s easier than ever before to ask strangers who believe in your business for startup capital.
If you chose this option, set a realistic crowdfunding goal and timeline, and explore which crowdfunding platform will be best for your business goals. You’ll also need a plan for sharing your crowdfunding link on social media since people can’t donate if they don’t know you’re asking for help.
5. Government Grants
There’s a myriad of federal, state, and local government grants for small businesses. The most challenging aspects of seeking government grants are finding them and specifically explaining in your application why your business deserves the money. If you want help finding and applying for small business grants, consider working with a company that has grant experts who can help you navigate the entire process.
6. Private Grants
Many businesses offer private grants for locally-based startups. Banks, larger corporations with local ties, and businesses looking to support minority-owned startups are all good options to begin your private grants search. If you opted to hire a company or agent to help you with the grant process, they should help you search for these grants as well.
7. Small Business Loans
Most banks have loans designed for small businesses. Unlike personal loans, business ones can come with more competitive interest rates and higher loan amounts. Most startups will find themselves needing some small business loans to supplement the other forms of capital they’ve discovered to fund their business.
8. Pitching Investors
Although pitching can feel foreign and scary to many new businesses, it’s often the best way to secure higher funding amounts. Research investors and if they’ve funded businesses similar to yours in the past. Know what makes your company unique and what niche in the market you’re filling.
Be prepared to explain in-depth your other sources of funds and what their investment will cover. Show that you understand your business’s financial needs and that others are willing to invest in your company. Demonstrating this will make investors more likely to believe in your business venture.
Exploring Funding for Your Business
When it’s time to turn your business plan into reality, one of your first tasks will be securing funding. Most start-ups will need to find funds from different sources. Be sure to explore all your financial options and determine which makes the most sense for your business and your needs. Just know that you might have to get creative, and you’ll likely have to explore multiple sources before successfully securing any funds.